Triumph of The Nerds Part II

IBM started off making mainframe computers for businesses. Once the computer business started to take off, IBM decided to build their own PC within one year.

PC's require software and an operating system.

Gary Killdall  ran a company m Interglactic Digital Research. He had invented the PC's first operating system called CP/M.

Jack Sams was looking for a package from Microsoft containing both the BASIC computer language and an Operating System. Unfortunately, Microsoft hadn't written an operating system and they needed Killdall's permission to use CP/M.

When IBM went to Gary Killdall's home to discuss the agreement, he sent them away. "This is the moment Digital Research dropped the ball. IBM, distinctly unimpressed with their reception, went back to Microsoft."

Microsoft was able to fashion on operating system by modifying a version of CPM. Microsoft and IBM called it PC DOS 1.0 

There were still some legal problems that had to be worked out before Microsoft could move forward with the operating system.Tim Patterson worked for Seattle Computer Products, or SCP. They still owned the rights to QDOS. The rights to the operating system were sold for 50K

 The IBM PC wasn't much better than what came before. In order to increase success, IBM created a spreadsheet program but called Lotus 1-2-3. 

The IBM PC had 50 percent of the market share and other companies wanted to reverse engineer their product.

Compaq was able to successfully reverse engineer an IBM PC and in their first year they sold 47000 PCs.

"Where Compaq led, others soon followed. IBM was now facing dozens of rivals - soon to be familiar names began to appear, like AST, Northgate and Dell." Bill Gates was providing the operating systems for all of these "IBM clones"

IBM wanted an operating system that could not be copied. They called it OS/2. 

At the same time Bill Gates was creating Windows "We kept saying to IBM, hey, Windows is the way to go, graphics is the way to go, and we got virtually everyone else, enthused about Windows. So that was a divergence that we kept thinking we could get IBM to - to come around on."

Larry Ellison the founder of Oracle says that IBM made a $100 Billion mistake by giving a third of their market value to Intel and a third of their market value to Microsoft by accident.